Page 116 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 6: Investment Strategies-I

4. Travel Loan: Finance is provided to meet out the travel cost of the customers either Notes
domestic or for international visits.
5. Education Loan: Finance is provided to meet out the education cost of children of the
customers.
Education Loan: Eligibility Criteria
Banks have set eligibility criteria for education loans. Some of the important pre-requisites
are mentioned in brief. A loan applicant has to be:
(i) An Indian national
(ii) Aged 16-26 years of age or any other range specified by the bank.

(iii) Have a good academic track record.
(iv) Have parents or guardians with stable source of income.
(v) Should have applied to a recognized university in India or abroad.
(vi) Should not be a minor.

Current Education Loan Interest Rates
For several education loan applicants, the bank offers a holiday period on repayment
while the student is doing the course either on the principal or on the interest or both. But
the interest rate at which you borrow is certainly going to become very important as soon
as your studies are over. The interest rate on an education loan depends on whether you
are studying in India or abroad, the course that you are applying for, your loan amount
and the tenure. Special concessions on interest rates are available if the student is a female.

Lending loans for educational purposes is a part of the priority sector lending activity for
Indian banks. The interest rates offered by banks are:
(i) Fixed interest rate

(ii) Floating interest rate
Banks will charge interest on a daily or monthly reducing balance. Usually, nationalised
banks offer variable interest rates for student loans, while private and foreign banks offer
fixed interest rates. Some banks also offer a choice between the two.

Task Visit a nearby bank in your area and find out about the various types of loan they
offer to their customers. Also enquire about the eligibility criteria, interest rates , documents
required and EMI calculation method.

Did u know? Income tax deductions are always welcome, even if the loan was taken to
fulfill academic ambitions of your children. Tax deductions are available only on the
principal of the education loan. The interest paid on these is not eligible for deductions.
6. Other types of loans:
Festival Loans: Finance is also given to meet out the festival expenses.
Loan Against Property (LAP): A loan against property is a loan against your house or even
a plot. If all the land titles are in place, you have an income and you are eligible then this

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